Change Lingerie could continue expansion with ten new stores abroad

Change´s leasing company was cautious about entering new agreements for financing of furnishings and was thereby limiting Change’s growth potentials in Norway. A working capital guarantee from EKF paved the way for new leasing agreements.

It is good that EKF helps to secure credit for the retail business. Without EKF Change would not have obtained all the required leasing agreements and we would have been forced to revise our growth strategy.

Claus Walther Jensen, CEO of Change Lingerie

​In the beginning of 2012 the Danish clothing company Change Lingerie planned to open 8 new stores in Norway as well as a new store in Sweden and one in Germany.

During the past few years Change has been expanding and establishing many new stores in among others Scandinavia, Germany and Spain and with the new stores in Norway, Change would reach a total number of approximately 150 stores. The aim was to increase the company´s revenue to secure the continuous growth of the company.

”The Norwegian market has got potential as the consumers do not show restrain as in many other markets. Our ambition is to become a nationwide chain in Norway,” says Claus Walther Jensen, CEO of Change.

Change typically rents the stores but invests about DKK 600,000-700,000 in furnishings per store.

In the past few years, Change has entered leasing agreements to finance the furnishings in order to ease the company´s liquidity situation and to promote growth. But their plans for new stores in Norway were met with reluctance by the leasing company.

​Claus Walther Jensen, CEO, had read about EKF and seen an advertising campaign on the possibility of working capital and export credit guarantees.

He contacted EKF for more information about the various possibilities and to find a solution for Change which could help the company set up stores in Norway, Sweden and Germany.

”I had no idea that EKF could get involved with retail business, and especially not in connection with setting up stores abroad,” says Jensen.

​He was therefore pleasantly surprised when EKF was willing to look into the possibilities.

”The retail business is seriously hit by the financial crisis which has made it more difficult to obtain credit. This occurs at a time when the market situation in Norway, among others, is particularly good and interesting for us,” says Jensen.

​​EKF offered a working capital guarantee covering 80 per cent of Change’s payments for leasing agreements for new stores abroad. The working capital guarantee consists of a facility of up to DKK 8 million which Change can make use of as required until year 2015.

The working capital guarantee fell in place in the spring of 2012 and Change could set up the new stores in Norway, Sweden and Germany.

”It is good that EKF helps to secure credit for the retail business. Without EKF Change would not have been able to obtain all the leasing agreements that we wanted and we would have been forced to revise our growth strategy,” says Jensen.

​He adds that expansion within the retail business usually requires a substantial amount of liquidity as it typically takes up to three to five years to establish a store.

”It is an amazing situation that we can pay off the investment in the Norwegian companies over a few years, while we gain foothold in the market,” says Jensen.

”We are aware that we have to repay the money and that we also need to pay for the working capital guarantee, so we strive towards a reasonable balance between earnings and repayment.”

Jensen adds that Change is also looking into the possibilities of expanding their business in other countries with the backings of EKF.